IRS may botch complaints of tax-exempt abuse-watchdog

July 02, 2012|Reuters

By Patrick Temple-West

WASHINGTON, July 2 (Reuters) - The U.S. Internal RevenueService is missing opportunities to catch possible abuse bytax-exempt groups, the agency's watchdog said on Mo nday amidconcern that some groups are spending heavily on the politicalcampaign for the Nov. 6 elections.

Allegations of abuse may be mishandled or lost, said thereport by the Treasury Inspector General for Tax Administration.Lax IRS enforcement may cost the government millions of dollarsin uncollected taxes, the report said.

The number of alleged tax-exempt abuse complaints to the IRS"has significantly increased over the last several years," J.Russell George, the head of TIGTA, said in an interview.

Critics say new political groups are pushing legalboundaries, putting pressure on the IRS and raising questionsabout their tax-exempt status and ability to keep donors'identities secret.

Tax-exempt groups monitored by the IRS range from churches,to the U.S. Chamber of Commerce and to Planned Parenthood.

In June, Democratic President Barack Obama's re-electioncampaign asked the Federal Election Commission to forceCrossroads GPS, a tax-exempt group founded by Karl Rove, formeradviser to President George W. Bush, to register as a PAC anddisclose its donors.

Thousands of complaints flood the IRS annually from thepublic, lawmakers and IRS auditors. While the IRS has morequickly acknowledged the tips, about a quarter of them takelonger than four months to process, the report said.

The IRS, which asked TIGTA to do the audit, declined tocomment.

The IRS could not immediately locate 26 percent of thecomplaint cases TIGTA requested as part of its audit. Otherentries into an IRS database were inaccurate.

Republican senators said in June the IRS is discriminatingagainst Tea Party and other conservative groups applying fortax-exempt status. Democrats are demanding the IRS probe whetherthe conservative groups deserve tax-exempt status.